893.5151/465: Telegram

The First Secretary of Embassy in China (Salisbury) to the Secretary of State

315. Hankow Embassy’s May 15, 6 p.m.,27 Tientsin’s May 18, 4 p.m. and this office’s 312, May 21, 1 p.m.28

American banker here states that local financial authorities are not yet imposing control measures to obtain foreign exchange. The small amount of Federal Reserve Bank notes in circulation indicates failure by the bank to exchange any large quantity for either existing issues or foreign exchange. Although the 7-month period fixed for withdrawal in North China of other than local issues ends June 10 the situation is still confused.
Inaction by the Japanese and monetary authorities is believed due to (1) the desire not to aggravate foreign commercial interests and other governments by imposition of exchange and trade restrictions unless absolutely necessary to implement the program for North China economic development and (2) the necessity of concretely amalgamating the Peiping and Nanking régimes before pushing forward the currency program. It seems possible that Japan’s own foreign exchange problem causes the Japanese Government to be prepared to make concessions if foreign commercial interests could thereby be induced to assist.

Sent to Hankow, Shanghai and Tientsin, by mail to Tokyo.

  1. Not found in Department files.
  2. Latter two telegrams not printed.